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The Deal: Berkshire Hathaway's Marmon Buys IMI Units

NEW YORK (The Deal) -- U.K. engineering group IMI plc said Wednesday, Oct. 16, it had agreed to sell two consumer-oriented businesses to Berkshire Hathaway Inc.'s (BRK.B) Marmon Group LLC for $1.1 billion as it hones its focus on industrial flow-control products and systems.

Marmon is to buy IMI's beverage dispense unit, which supplies cooling and dispensing systems to drinks makers and retailers, and had 2012 revenue of £313 million ($502 million) and profit of £45 million. It is also buying IMI's merchandising division, which had 2012 revenue of £183 million and profit of £27.9 million.

The Chicago company stepped forward with an offer for both divisions after IMI in March said it may sell most of its merchandising unit. IMI plans to return £620 million of the proceeds to shareholders and contribute £70 million to its U.K. pension fund.

The transaction "positions IMI as a highly differentiated, market leading flow control business focused entirely on industrial end markets," said IMI CEO Martin Lamb in a statement, noting that "structural" trends including climate change and urbanization should aid growth in that sector.

Marmon comprises three largely independently managed companies, which between them own about 150 manufacturing and services businesses. The three Marmon companies are: Marmon Engineered Industrial & Metal Components Inc.; Marmon Natural Resource & Transportation Services Inc. and Marmon Retail & End User Technologies Inc. Their consultancy and administrative services are supplied by the Chicago central office, which Marmon insists is not a conventional headquarters.

The group had more than $7.16 billion in revenue in 2012.

Its recent acquisitions include the June purchase of the assets of Lindenau Fahrzeubau GmbH, a German tank fabricator, depot and repair facility, and the acquisition in September 2012 of Tarco Steel Inc. and Metal Fab LLC, of Binghamton, N.Y.

Warren Buffett's Berkshire Hathaway bought Marmon for $4.5 billion in March 2008 from the founding Pritzker family.

The price Marmon will pay for the IMI businesses is subject to adjustments on completion, which the companies expect to take place in early 2014. IMI needs shareholder approval to return the cash proceeds. That initiative comes on top of a share buyback program at IMI covering £175 million of shares which will run until March 2014.

Shares in Birmingham, England-based IMI were up 29 pence at 1,528 pence by mid-morning in London, valuing the company at about £4.8 billion.

Robert W. Baird & Co. advised IMI on the sale.

Written by Laura Board

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